管理層發言
Welcome to Liberty Media Corporation's 2026 Second Quarter Earnings Call. (Operator Instructions.) As a reminder, this conference will be recorded, August 6. I would now like to turn the call over to Hooper Stevens, Senior Vice President, Investor Relations. Please go ahead.
Thank you for joining us this morning. This call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Forms 10-K and 10-Q filed by Liberty Media with the SEC. These forward-looking statements speak only as of the date of this call, and Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Media's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. On today's call, we will discuss certain non-GAAP financial measures for Liberty Media, including adjusted OIBDA, constant currency for MotoGP. The required definitions and reconciliations for Liberty Media Schedule 1 and MotoGP Schedule 2 can be found at the end of the earnings press release issued today, which is available on Liberty Media's website. Speaking on today's call, we have Liberty's President and CEO, Derek Chang; Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling; Formula One's President and CEO, Stefano Domenicali; MotoGP's CEO, Carmelo Ezpeleta; and other members of management will be available for Q&A. With that, I'll turn it over to Derek.
Great. Thank you, Hooper, and good morning, everyone. We are thrilled with the second quarter performance at both F1 and MotoGP. Amidst all the global uncertainty and credit to our operating teams in this challenging environment, our businesses are motoring along at a speedy pace. Our priorities for 2026 remain unchanged, which are to build upon Formula One's durable business model, establish the foundation for MotoGP's next phase of development and allocate capital with discipline. Since May, we have made tangible progress against each priority while keeping the distinct identity of each sport at the center of our approach. Formula One continues to demonstrate the breadth and durability of its platform. A new technical era is producing compelling competition on track. There is immense demand from fans, promoters, commercial partners and media platforms. Meanwhile, our business continues to perform incredibly well with notable momentum across Paddock Club, licensing and sponsorship. In the U.S., Formula One's momentum on Apple continues to build with viewership up year-over-year, season to date and total hours watched up 13%. We could not be more pleased with this result. The digital product is great and sponsors across the F1 ecosystem are very happy with our distribution on Apple. This season, F1 has attracted a much younger and more female audience in the U.S. on Apple TV. Our experience with Apple continues to reinforce the strategy of pairing a premium live coverage with product innovation and broader ecosystem breadth without compromising reach. Through Apple's ecosystem, F1 is being amplified, discovered and embraced by a new generation of fans, and we couldn't be more excited to see what this partnership will bring to our store in the coming years. We are also creating more direct and frequent relationships with fans. Original content, licensing and experiential activations are extending engagement beyond race weekends. For example, Passenger Princess, which in its first season generated close to 300 million views, returned for a second season last month. The Las Vegas Grand Prix's 10-year extension through 2037 is a milestone that underscores F1's growing U.S. presence. At MotoGP, we are beginning to capitalize on the significant opportunities ahead, and we are very happy with our progress so far. Racing season has been exceptional with incredibly tight competition among the top five riders. More importantly, for the long term, MotoGP completed agreements with all manufacturers and teams through 2031. Together with new technical regulations beginning next year, this establishes a stable framework for investment, promotion and commercial growth. We continue strengthening the organization, including progressing on key hires and building commercial capabilities while pursuing growth in ways that are authentic to MotoGP. There is positive momentum in the business with new media agreements signed in Spain and Portugal and the extensions of the Malaysian and Silverstone Grand Prix. Fan activations like the 20,000-person immersive watch party in London in June broaden access and visibility and underscore our priority of bringing the MotoGP experience closer to city centers. Our capital priorities at the Liberty level remain to support attractive organic growth, maintain a prudent balance sheet and evaluate opportunities that complement our existing assets. Brian will cover the financial results in more detail, and Stefano and Carmelo will discuss the operating businesses. Our confidence remains high in the durability of Formula One's growth and their increasingly direct and always-on fan relationships. Likewise, we continue to feel very excited by MotoGP's long-term potential as this organizational and commercial foundation takes shape. Now I'll turn it over to Brian.
Thank you, Derek, and good morning, everyone. We'll start with the Formula One business. The race count this quarter is especially challenging due to not holding the Saudi and Bahrain GPs in April and other differences in the calendar, resulting in a 44% decline in the race count for the quarter and a 27% decline year-to-date. With that in mind, I'll focus on year-to-date comparisons. And as always, it remains best to focus on our business on a full year basis. As per the calendar variability, the business is performing incredibly well. Results reported year-to-date reflect a 22-race calendar, the number known at June 30. Subsequent to the end of the second quarter, we have rescheduled the Bahrain Grand Prix, which will be held in Malaysia in October, bringing our expected race count to 23 races for the year. We expect to start accruing season-based revenue costs and associated true-ups with respect to a 23-race calendar starting in the third quarter of this year. No additional 2026 calendar changes may be necessary. We expect to return to a full 24-race calendar next season. The second quarter of 2026 held five races compared to nine races in the second quarter of last year. Year-to-date through the second quarter, F1 also had three fewer races with eight races held in the current year-to-date period compared to eleven races held in the prior year. Year-to-date, revenue declined 15% and adjusted OIBDA declined 30%, driven by the change in race count. The decline in primary revenue was driven by the calendar variance and its effect on recognition of season-based revenue with 8 out of 22 assumed races staged year-to-date with approximately 36% of season-based revenue recognized compared to the prior year period when 11 out of 24 races had been staged and approximately 46% of season-based revenue had been recognized. During the second quarter, media rights revenue was also impacted by the one-time revenue associated with the release of the F1 movie last year. Offsetting the decline was underlying contractual fee increases across our three primary revenue streams and revenue generated from new and renewed sponsorship partners. Other revenue declined due to lower hospitality and freight revenue from three fewer events held year-to-date and lower F3 revenue due to the sale of cars at the beginning of the new F3 cycle last year. This was partially offset by strong demand for the Paddock Club at recurring events, continued growth in our licensing business and growth in the Grand Prix Plaza activities in Las Vegas. Adjusted OIBDA decreased year-to-date because of the lower event count. The revenue decline discussed above outpaced the decline in expenses. Decreased operating expenses included lower team payments and expenses related to the delivery of hospitality offerings, travel, freight and other costs due to the calendar variance. SG&A expenses increased driven by higher personnel and information technology costs, partially offset by lower marketing costs as we lap the 75th season launch event last year. Team payments as a percent of pre-team-share adjusted OIBDA were 61.7% year-to-date and were also accrued based on a 22-race calendar assumption. For the full year, we still expect to see roughly 200 basis points improvement in leverage on this metric, in line with the average that we've seen over the past four years. After 2026, for the remainder of the term of the new Concorde agreement through 2030, we expect the payout percentage to remain relatively stable. Team payments are best analyzed on a full year basis due to quarterly fluctuations in team payments as a percent of adjusted OIBDA. Now turning to MotoGP. A reminder that we closed the acquisition on July 3, 2025. So our financial results prior to the date of the acquisition are presented on a pro forma basis, so the transaction occurred on January 1, 2024. The majority of MotoGP's revenue and costs are euro-denominated and as such are subject to translational impacts from foreign exchange fluctuations. I will focus on constant currency results here. Similar to F1, I'll also focus on year-to-date comparisons. Year-over-year comparisons are impacted by the mix of races, not just the number. And as a reminder, MotoGP flyaway races generally carry higher costs, including freight, travel and earn-out fees. MotoGP race count itself was identical year-over-year for both the quarter and the year-to-date periods. Revenue increased at MotoGP year-to-date, driven by growth in race promotion from event mix and sponsorship revenue due to new sponsors and underlying contractual growth. A reduction in contractual media rights and a decline in title sponsorship revenue related to event mix partially offset that revenue growth. Adjusted OIBDA also grew year-to-date, driven by both revenue growth and a decline in expenses. Cost of MotoGP Motorsport revenue decreased due to the impact of lower freight expenses from the race mix as well as lower hospitality costs related to MotoGP's new hospitality agreement with Quint, whereby MotoGP now recognizes revenue and costs related to hospitality on a net basis. Looking briefly at Corporate and Other results year-to-date, revenue was $12 million, which relates to the rental income generated by Grand Prix Plaza in Las Vegas. Corporate and Other adjusted OIBDA was a loss of $16 million and includes Grand Prix Plaza rental income and our corporate expenses. At quarter end, Liberty Media had cash and liquid investments of approximately $1.5 billion, which included $1 billion of cash at F1 and $142 million of cash at MotoGP. Our debt was approximately $5 billion at quarter end, which included $3.3 billion of debt at F1 and $1 billion of debt at MotoGP with $497 million at the corporate level. F1's $500 million revolver and MotoGP's EUR 100 million revolver both remain undrawn. We did reprice MotoGP's debt in June, and we priced a EUR 720 million Term Loan B, a USD 200 million Term Loan A and a new EUR 100 million multicurrency revolving credit facility at attractive terms with future reductions in margin expected as the business delevers. Additionally, we repaid a portion of MotoGP's debt funded with cash from MotoGP's balance sheet. At quarter end, Liberty Media's net leverage was 3.4x. That is a slight uptick from the end of the first quarter, but it's largely driven by the F1 calendar variance. F1 and MotoGP are both in compliance with the debt covenants at quarter end. And with that, I'll turn it over to Stefano to discuss Formula One.
Thanks, Brian. The 2026 season so far has delivered some incredible racing and amazing moments for all of our fans. There have been great battles for podiums among Kimi, George, Lewis, Lando and Charles that have fueled excitement on track. The championship battle remains highly competitive, and I expect the teams to converge more and more as the season progresses. The news I knew would become reality is that attendance is up, audiences are up, digital numbers are growing and the fans are enjoying what they are seeing. The fans are the heart of everything we do, and they are loving the season. As you know, the safety and security of everyone in the sport remains our first and foremost priority. We have closely monitored developments in the Middle East region, originally hoping to bring back one race to the region, but unfortunately, we were unable to do so as originally planned. Instead, we recently announced the great news that we will recover the Bahrain Grand Prix, but it will be hosted by Malaysia, creating an exciting triple header alongside Baku and Singapore. I want to thank His Majesty, the King of Bahrain, His Royal Highness Prince Salman of Bahrain and His Majesty, the King of Malaysia as well as their respective governments and, of course, the FIA and the promoters for all their collaboration and flexibility in making this race possible. It once again shows that we can adapt, find solutions and deliver incredible results for the sport. Looking ahead, we continue to expect that Qatar and Abu Dhabi Grand Prix are to currently proceed as scheduled for a 23-race calendar this season and we expect to return to a full 24-race calendar next season. Engagement trends continue to underscore the strength of our sport. We welcomed 3.3 million attendees to date with all 10 races selling out through Belgium. Five races set new attendance records, including Silverstone, welcoming 564,000 fans, making it the most attended race in the sport's history. Our Sprint format continues to drive higher Friday attendances and stronger daily attendance through our race weekend. The success of the Sprint format continues to drive growing interest from promoters in all the Sprint races, and we expect to expand the number of Sprints for next year and to provide further details soon. Our hospitality offerings continue to benefit from huge demand for premium experiences. The Paddock Club remains sold out for the rest of the season and House 44, which is also sold out this season, has been a standout success. We plan to expand House 44 from nine locations this year to thirteen locations next year. At the Belgian Grand Prix, we launched our new premium experience, The Out Lap, in partnership with LVMH. Early feedback from our partners and fans has been overwhelmingly positive, and we expect to operate this experience across Europe next season. Retail sales remain robust and highlight the underlying consumer demand for F1-branded merchandise. At Silverstone, we introduced a new flagship retail concept that offers fans a broader and more diverse product assortment. We plan to expand this flagship format to Monza, Madrid and Austin later this year. Building on the success of the specialty F1 Disney store in Asia, we launched another Disney retail hub at the Montreal race this quarter. Additionally, we also opened two new F1 hub locations in Montreal and London, further extending our retail footprint and following the success of the original concept in Las Vegas that returns in November. We continue working with our promoter partners to elevate our premium hospitality experience, including adding new capacity increases this season at Silverstone, Monza, Monaco, Austin and Hungary, and we have planned expansion next year in Austria. In Monaco this season, we added the third floor to the Paddock Club in addition to diversifying our premium product mix with five different experience packages. At Silverstone, we opened our Turn 1 Annex in our Paddock Club, taking our premium capacity to an all-time high this season. At Austin, we are excited to open our new structure at Turn 1 later this year, and we also have additional planned expansion next year. We also continue to see growth in our global TV audience led by several key strategic markets, including Brazil, Italy and China. In Brazil, the British Grand Prix reached a record of 18 million viewers across TV Globo and SporTV 3, generating the highest audience for the event in eight years and the largest audience for any F1 race globally since 2020. In Italy, TV audiences are up 27% through Silverstone versus last year, helping drive broader growth in fan engagement across our ecosystem. In China, the momentum generated by the Chinese Grand Prix, where weekend audience more than doubled year-over-year, has continued throughout the season, supported by increased coverage and growing audiences. Our social and digital platforms continue to play an important role in bringing our younger digital-first audience closer to our sport. We grew our social media followers 19% year-over-year with particularly strong engagement on TikTok. Our total YouTube views surpassed 13 billion, up 30% year-over-year, while our YouTube Highlights views have reached almost 200 million views with over 15 million hours watched. While we continue to benchmark our sport engagement using traditional measures of viewership, we also recognize that as our fan base continues to evolve, so too does the way our fans engage with us across a diverse range of platform channels and experiences. For example, the LEGO Drivers Parade at Silverstone generated more than 70 million video views across multiple platforms, creating another culturally relevant moment that captured attention far beyond the live race itself. To reflect this evolution, we are continuing to enhance how we measure and value fan engagement, building a more comprehensive view of how fans connect with Formula One across the entire ecosystem. Our partnership with Apple underscores this ability to interact with fans across multiple touch points, enabling a more holistic view of engaging with our sport. Since launching on Apple TV, F1 has attracted a younger audience while also expanding its reach among female fans. Our sport continues to build momentum on Apple TV, delivering strong viewership and engagement with fans this season. The strength of Apple's ecosystem has already helped us reach and engage with new fans across the U.S. F1 isn't just being watched. It is being discovered, followed and embraced by a new generation of fans across every Apple platform and device. Our growing fan engagement continues to translate into sustained interest from our commercial partners. With respect to our media rights, we remain active in our negotiations and renewals, recently renewing with ServusTV in Austria in a multiyear agreement. Globally, our F1 TV product continues to perform well with F1 TV revenue, not including the U.S. where the arrangement has changed, increasing 18% year-to-date. Our race promotion business has never been stronger. While our calendar is fully allocated through 2028, interest from new destinations to host a race remains robust with many potential host cities seeking to develop long-term proposals that will drive tourism, investment and broader economic activity around a potential race weekend. Our active pipeline, despite our calendar being full, underscores the strength of the sport's commercial proposition in an era of expanding media reach, deepening partner engagement and growing consumer demand globally. We are equally thrilled with the phenomenal progress we have made this year with the Las Vegas Grand Prix. We have added our very first F1 Afterparty concept featuring the iconic Backstreet Boys at the Sphere following the race on Saturday night. Our ticket sales are trending well ahead of last year with respect to both volume and revenues. In fact, we are already at month-end September 2025 levels as of the end of July. And on a like-for-like basis, excluding ticket sales for the Backstreet Boys, we have also seen strong performance. We have also recently announced our 10-year extension with the LVCVA, keeping the Las Vegas Grand Prix on the calendar through 2037. This extension reinforced the strategic importance of this race to our local community partners, and we now have greater certainty to invest in long-term infrastructure and operational improvements, reducing future build-out costs. Grand Prix Plaza in Las Vegas also continues performing well with private events, attraction and watch parties performing really well with attendance on track to surpass 2025 levels. Sponsorship activity remained strong during this quarter. We extended our agreement with Pirelli as our official tyre supplier to 2028 and welcomed Flexjet as our official private aviation supplier in a multiyear partnership. Additionally, we also announced Fever as our new centralized ticketing platform for f1.com starting next season, bringing the strength of their marketing platform to our sport and ensuring we continue showing up in the most culturally relevant locations. By partnering with Fever, we will deliver a smoother fan journey with more sophisticated technology to improve discoverability and ticket purchasing. Momentum around our licensing business continued to build. We recently announced a new multiyear global publishing partnership with DK Books, bringing our storytelling to a new level for fans of all ages to experience F1. We have also renewed our partnership with Automobilist, which continues to print exclusive F1 posters and calendars for us. We also recently partnered with Hasbro to launch a special F1 themed edition of MONOPOLY. In addition, we have signed multiple new agreements through business partnerships, including Gentle Monster and Uniqlo, and have many additional product launches planned with and without Disney globally for the remainder of the year as we further the reach of our sport with iconic global brands. While we remain momentum across all parts of our business, we believe Formula One has an exciting growth journey ahead, and we are excited by the opportunity. We are confident that the foundation we are building today will drive enduring value for all our partners and stakeholders. Avanti tutta! "Full speed ahead." And now I will turn the call to Carmelo to discuss MotoGP. Carmelo?
Good morning, and thank you, Stefano. It has been an outstanding first year growing our sport with Liberty Media, and we look forward to building on this momentum with Liberty's continued support. Our season this year has been incredible. The competition has never been tighter, with only 24 points splitting the top five riders season-to-date with notable strength from Aprilia. To date, 12 riders across seven teams and three manufacturers have made the podium. Congrats to Ai Ogura on winning his first Grand Prix at Assen, our first Japanese winner since 2004 and the first graduate of the Asia Talent Cup to win a Grand Prix. Consistent with our history, we have successfully signed the manufacturers and teams agreement for the next five years. This renewal provides the necessary foundation to grow our sport collectively. The most important outcome from this agreement is the strong alignment across all parties on a shared vision, which is to evolve our sport while maintaining its unique heritage. Under the new agreement, we are collaborating on ways to optimize cost while preserving the competitive integrity of the sport, allowing teams and riders to reinvest back into their commercial efforts as we work collectively to realize our reach. We will increase our investment into the sport with shared responsibility across manufacturers and teams to help drive the long-term commercial success of MotoGP, creating a strong brand to continue innovation and performance and reinforcing MotoGP as a premium global sport. We continue to grow MotoGP engagement, both on and off track. Across the first 11 races, attendance is up 4% with record attendance in Thailand and Germany. We also continue to see growth in our TV audiences with viewership up 3% through Mugello with notable strength in our U.S., Spanish and Austrian markets. We also recently hosted a watch party for the Dutch Grand Prix at the Outernet in London, drawing over 20,000 visitors and look forward to running the same activation for Silverstone. As we broaden our reach, we see attractive opportunities to engage fans in creative immersive experiences in key markets around the world. We remain focused on extending MotoGP's global footprint and are encouraged by the momentum across our digital and social footprints. We ended the quarter with 63 million social media followers, a 3% increase year-over-year, with particularly strong performance on TikTok, where engagement increased over 80%. Our Chinese social media platforms also delivered strong growth with followers increasing 26% as we continue to deepen our presence in key growth markets. Digital revenue, excluding video parts, increased over 30%. We have had a productive quarter with several new and renewal partnerships across our business. In the media rights, we continue to strengthen our overall footprint. We have recently renewed with Sky DACH covering Austria, Germany and Switzerland, with DAZN in Spain and Portugal and with RTBF in Belgium in multiyear agreements. We also continue building momentum in race promotion, extending agreements with several promoter partners, including Malaysia to 2031 and Silverstone through 2028. Looking ahead to next year, we are excited to race again in Argentina at Buenos Aires, and for the debut of the Adelaide Grand Prix, we look forward to unveiling the first visual renderings of the new Adelaide Circuit over the next few weeks. In our sponsorship business, we signed CAA as our global sponsorship agency, further strengthening our commercial platform and capitalizing on our brand refresh and growth. In hospitality, we are encouraged by the early momentum with our expanded partnership with Quint where we are working together to enhance the premium hospitality experience at our events. We are excited by the path ahead and remain encouraged by our early momentum. We look forward to continuing to update the investor community on our progress. Now I will turn the call back over to Derek.
Great. Thank you, everyone. We appreciate your continued interest in Liberty Media. With that we'll open the call up for Q&A. Operator?
分析師問答
(Operator Instructions.) Our first question is from Kutgun Maral with Evercore ISI.
Two, if I could. First, I wanted to dig into the underlying trends across media rights. I think the Apple deal in the U.S. continues to get a lot of attention, but you inked a number of other broadcast agreements since then, and we don't get as much visibility into the economics of those. I know every deal is different and the linear and digital media landscapes keep shifting. But could you give us a sense of how those conversations are generally evolving? And in broad strokes, is there a helpful way to think about the trajectory of media rights revenue as these deals get renewed or extended? And then second of all, I wanted to ask about the Las Vegas Grand Prix. It's very encouraging to hear ticket sales are trending well. I know you don't break out the financials separately and discretely for the race. But can you share any color on how profitability is trending year-over-year? Because if current ticket sales and revenue trends hold and you continue to evolve the vendor contracts, it seems like profitability should be positioned to improve as well. But I'd appreciate your thoughts on how we should be thinking about the financial impacts of the 10-year extension going forward as well.
Sure. This is Derek. I have to start, I think, on the media rights. As you know, media rights across the globe ebb and flow depending on who the players are, what rights are coming up and other factors as they relate to the dynamics of the different subscription businesses or broadcast businesses in those markets. We are constantly in discussion with partners not only in negotiation but outside of that because they're our partners, and we're always trying to build and generate as good a product as we can with them. Through those discussions, you're constantly hearing about what's going on in these markets, whether digital players are coming in globally in other markets and what their expansion aspirations are. More broadly, we feel good that we have great products and content that people want. We are, to some degree, subject to things outside of our control. The things we can control are continuing to make the sports that we own as compelling and as interesting for our partners as possible. That puts us in the best position as we go to market every time. We are constantly having discussions with these partners, and at times we have taken advantage of opportunities by renewing deals early where it made sense, and we will continue to look for ways to do that because what we are interested in is the long-term stability of our product and making sure we're with the right partners. Just like with race promoters, if we can find the right partners who will invest for the long term, we think that builds our brand and value. We are encouraged by where the Apple deal has gone. We're encouraged certainly with F1 with the recent renewals with Sky. And on the MotoGP side, we're very encouraged by what we've done recently, particularly with DAZN in Spain and Portugal, which are important markets for us. Stefano and Carmelo, I don't know if you want to add anything to that?
Yes. A couple of points to add to what Derek has just said. First of all, the beauty of what we are doing is that we control the content and we produce it. This is an incredible asset and an opportunity to redefine reach in the media world. We don't have to forget that reach is extended not only through great deals with traditional media partners, but because there are other ways to produce content and other platforms to connect people. There are many platforms to reach people that are creating value for broadcasters to connect with us either through traditional products or digital products. That's why the partners that are working with us want to renew earlier than the expiration date because they see the value of what they're doing. On our side, making the right market-by-market evaluation, we will see if new trends can be monetized or help us achieve a different dimension of reach. We are in a great spot today. We are an incredible sport, and because of what we are producing, we have leverage in the market. Looking ahead, we are confident that we can produce content across different platforms around the world and monetize each contract as much as possible in every market.
Our next question is from Stephen Laszczyk with Goldman Sachs.
Brian, you called out that absent the calendar variability at F1 this year, the business is performing exceedingly well. I was just curious if you can speak a little bit more to the underlying performance you've seen year-to-date and if there's any particular parts of the business that are performing better than expectations heading into the year?
Yes. Thank you for the question, and I can certainly start, and I'll let Stefano add on. The calendar variability makes it very challenging because you have lower proportionate revenue recognition. But if you look through that, we're seeing really good growth on sponsorship as we did last year, we're seeing really strong performance in licensing, and demand for the Paddock Club is very strong. Obviously, with fewer races you don't necessarily see that come through the numbers, but those are three areas I would specifically call out.
I agree with Brian. Licensing is on the trajectory we expected and there's tremendous effort to characterize and grow that revenue stream. Stay tuned for developments because it's important we continue to build that stream. Paddock Club is linked to experiential offerings, and this will create further opportunities to grow revenues in the future because experiential opportunities are a key focus. We experimented in Spa, offering an exclusive experience with a world-class chef, tours and unique food experiences on Saturday night. These are things money cannot buy and are the type of offers that create additional revenue potential. Also, I want to emphasize that our ability to react and find solutions, like moving the Bahrain Grand Prix to Malaysia, shows our vitality and commitment to fans and partners. That agility will help future revenue streams as well.
Our next question is from Matt Condon with Citizens Bank.
Stefano, you mentioned the commercial opportunity, and I know you've talked about this in the past as being a big future opportunity. Can you just talk about the key levers to make this a bigger part of the business over time?
Sorry, Matt, can you repeat the question because the line was a little bit distorted on my side, sorry.
Sorry. No, I was just asking about the commercial licensing opportunity. You talked about this being a big future opportunity. Just wanted to know the key levers to getting this to be a bigger part of the business over time.
Okay. The beauty of what we are doing is finding opportunities our market presents. We have already made incredible steps across categories to offer to our customers. Investment in digitalization that Brian mentioned will allow us to grow this opportunity further. Different markets create different visibility and opportunities, which will allow us to maximize revenue connected to those markets. We are focused on renewing major partners earlier rather than waiting until contract expiration. One area we want to protect is AI; we will not grant exclusive control of that area to a single partner because it's too big. Our ability to segment that area of the business creates many opportunities. Key licensing partners are growing year-by-year, and through different propositions and capsule collections we are creating content that enables us to reach fans more broadly. We are in a good position to monetize moving customers through our partners which gives us great visibility into a positive revenue trajectory going forward.
Great. That's very helpful. And then I just wanted to ask about the new agreement with the manufacturers and teams for MotoGP. Can you maybe just give us an overview? And what are the key points that we should really know as you think about this going forward?
This is Derek. The key points are that we've got another five-year deal with the teams and the manufacturers, and we have everyone moving in the right direction on the technical aspects of the sport. The other key components are how we're going to build the sport together. This process took time, and as in any discussion there were gives and takes. We're coming out of it in a way where everyone—teams and us—are working together to build the sport both as a product and from a commercial standpoint that will benefit all of us. Carmelo, do you want to add more?
Thank you, Derek. It's a very positive outcome for us. After the Liberty Media acquisition closed, it was the time to start real conversations with manufacturers and teams. There's real alignment on how we want to build MotoGP together—what the vision and strategy are for the sport and how manufacturers and teams are part of that. The idea is to raise all boats, putting together investment to allow teams to invest in their own resources and grow their brands. The sport is in an amazing place from a racing perspective and the 2027 regulations will only improve that. We've had great conversations with teams and manufacturers to align on the commercial side and the strategy behind building the sport.
Our next question is from David Joyce with Seaport Research Partners.
More on MotoGP, please. Can you help us understand how much of the cost base in the quarter was allocated to incremental growth initiatives as that sport aims to apply the Formula One playbook? And separately, on the sponsorship side there for MotoGP, how much of that is expiring in the next year that could result in either upgrading the sponsors or expanding relationships or getting step-ups based on the continued fan engagement growth there?
Why don't we start with the cost side. The investment phase is not pronounced in the quarter. Looking year-to-date, we have higher marketing expenses as we try to grow the brand. There are some incremental investments in personnel, but those are not material. You can see SG&A is relatively flat for the quarter. On cost of revenue, there are investments but those are offset by changes in the schedule where you have higher payments to teams due to schedule changes and lower freight costs because of the race mix (for example, a lower flyaway impact from Qatar). So far, you're not seeing material increases in the cost base from investment other than some personnel and marketing costs.
On the sponsorship question, think less about what's expiring in any single year. We have a regular flow of deals, often three-to-five year arrangements, so you'll periodically see renewals. But it's more about the opportunity set and how sponsorships can be broadened. Historically, MotoGP had a fairly endemic sponsorship base. As we look further, the opportunity set is larger and begins to open up more categories beyond typical renewal paradigms. That broader opportunity is how we frame potential sponsorship upside.
Our next question is from Brent Navon with Bank of America.
We've seen Formula One increasingly add Sprint races to the calendar. How many more can realistically be added here? And can you explain how this filters through the business? Is this just extra race promotion revenues? Are there media rights or sponsorship opportunities that come with it as well or even hospitality?
Sprint races started to create on-track action and provide leverage for promoters and for us during the weekend. We will have more Sprint races next year; we'll announce the calendar and how many in due course. The principle is that Sprint can increment revenue streams and create new commercial opportunities as we've already seen. We want to do it the right way to preserve scarcity and value; we shouldn't over-distribute it commercially. We will move further in this direction next year.
Great. That's helpful. A follow-up on media rights: A few months ago, when you announced the Sky extension, Germany was absent from that agreement. There have been recent reports suggesting you may add a race back to the calendar in Germany. Should we interpret that as Germany being an untapped growth market? How could bringing a race back help media rights discussions there?
Germany is a market in flux with changes like the RTL/Sky dynamics and digital streaming players entering. A few years ago it may not have been as robust, but it's looking more robust now. Those are market-driven phenomena. Layer on our product and having races in that market, and it becomes a more attractive marketplace for media rights and promoters. It's a function of market dynamics and our product availability.
To add, RTL was an important step to regain reach in that market. When the right negotiation occurs, Germany will likely look different from Italy or the U.K. You may see digital platforms or streamers apply for rights because the market could support it. Germany has key automotive partners—Audi and Mercedes—and historically has been one of the most important markets for Formula 1. The dynamics in Germany are not the fastest to change, but the new situation makes it a potentially very interesting market that could have a positive effect on media and promoter sides in the medium term. It's not a short-term call, but it is likely to happen and is important to keep in mind.
Our next question is from Ian Moore with Bernstein Research.
Everything you shared on premium hospitality, Paddock Club, is really encouraging. What are you learning about supply versus demand dynamics there? You've added a lot of capacity over the past couple of seasons. What are the signals giving you confidence that demand for these experiences continues to outpace supply?
Today, the signals are very positive. For example, we have already allocated Paddock Club hospitality for next year through 2028, which shows strong forward demand. Promoters and teams are investing and we see solid partners willing to commit. We are introducing innovative products and experiences, and everyone is watching what we prepare for the future of sports entertainment. Demand remains robust not only in pricing but in appetite for unique, premium experiences. We remain focused on creating initiatives and extending this positive momentum as long as possible.
Thank you, Stefano. Thank you, Ian, and everybody else for participating today. We look forward to speaking to you more offline and seeing you in the coming weeks. Take care.